[Congressional Record Volume 140, Number 29 (Wednesday, March 16, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                         WHITEWATER AND MADISON

  Mr. D'AMATO. Mr. President, there has been a lot said, and I think a 
lot more to be learned, on the situation of Whitewater and Madison. I 
look today and find out something that I suspected may have been taking 
place, and that suspicion today is given greater fuel by the article 
that I read today in the New York Times, March 16, 1994, by Stephen 
Labaton. I am going to read part of it, just part of it:

       Clinton administration officials last year rejected a 
     recommendation by a senior regulator to open a Treasury 
     Department investigation into the failed savings and loan 
     association owned by President Clinton's former partner in 
     the Whitewater venture, Government and Congressional offices 
     said today.
       The request to open a broad investigation of the savings 
     institution was made by Brian McCormally, the top enforcement 
     official for the Midwest Division of the Office of Thrift 
     Supervision, which is part of the Treasury Department.

  The article goes on--I am not going to read it verbatim--to say:

       The two agencies have overlapping jurisdictions--

  That is, the RTC, and the OTS, have overlapping jurisdiction.

     and often conduct separate investigations into failed savings 
     associations. But the Thrift Supervision Office has a larger 
     staff and greater enforcement powers and has handled many of 
     the most significant investigations of savings associations 
     and their lawyers and accountants.
       Government officials and Congressional aides said the 
     request was turned down last fall by Mr. McCormally's 
     supervisors in Washington, Carolyn Lieberman, acting counsel 
     to the thrift supervision office, and Jonathan Flechter, 
     acting director of the office. They report to senior 
     political appointees at the Treasury Department, and rarely 
     make major decisions without high-level consultations.
       William E. Fulwider, the spokesman for the Office of Thrift 
     Supervision, declined to discuss the case or to say whether 
     its officials had consulted the Treasury Department.
       As enforcement director for the Midwestern region of the 
     Office of Thrift Supervision, Mr. McCormally oversees 
     enforcement efforts against savings associations in 23 
     states, including Arkansas. He is best known as the Federal 
     regulator who supervised the inquiry into Neil Bush, a son of 
     former President George Bush, who settled charges of conflict 
     of interest over his role in the Silverado Banking, savings 
     and Loan Association in Denver.
       Officials said Mr. McCormally asked his superiors in 
     Washington last fall for permission to look into the collapse 
     of Madison. It is unclear whether he made the request before 
     or after the meetings between Treasury and White House 
     officials concerning the Resolution Trust Corporation's 
     inquiry.
       The Office of Thrift Supervision regulates the savings 
     industry, and the trust corporation handles savings 
     institutions that have been seized and bailed out by the 
     Government. The thrift supervision office, created in 1989, 
     also has many records from its predecessor agency, the 
     Federal Home Loan Bank Board, and officials said it had many 
     of Madison's files from the 1980's.

  Mr. President, I asked this question yesterday during what was 
supposed to be a talk show. But it was like putting--in the old 
gladiator days--people in the midst of an arena. It was an arena 
setting. I was one of the participants.
  Today, in America, the people have a right to take their opinions and 
make them known.
  If George Bush were President, and the matter as it relates to 
Madison Guarantee concerned him, the same situation, and he were here, 
would the Congress of the United States say that it was not important 
to hold hearings? We held hearings on the House side as it relates to 
George Bush's son, Neil. The Banking Committee chairman, Mr. Gonzalez, 
had no problems. And, yes, there were Federal investigations 
undertaken.
  None of us suggest that we just go forth willy-nilly with hearings 
without giving the special counsel the opportunity to interview those 
witnesses first, as we suggested with him. And we said that with 
something that important to him we would not grant immunity to 
witnesses, that we would do it in the manner in which it would be less 
detrimental to his case.
  But the facts have dribbled out, and are dribbling out. Most recently 
we have these alarming allegations in the New York Times. Mr. Fiechter 
was before our committee. I guess it would have taken a great act of 
courage on his part to indicate about this because he knew that we were 
concerned. We did not ask him the precise question as to whether or not 
he ever consulted with people as it related to the Treasury Department. 
But he could have raised it as it related to the White House.
  But this situation obviously cries out. We now have one of the 
independent regulators that came in and had meetings which were, at the 
very least, inappropriate. I am talking about the RTC. Then when we 
find out that the OTS, and the same enforcement official who handled 
President Bush's son's matter, was not permitted to go forward. I 
suggest to you that Congress has an absolute total responsibility to 
find out why. That is not the province of the special prosecutor; his 
mandate relates to criminal prosecutions. Our role is to see whether or 
not there is an abuse of power.
  When we have this kind of information coming forward--and let us 
understand, these people are not going to come forward on their own. 
They need the protection of the Congress and Congressional hearings. 
Those people, otherwise, would rightfully feel that they would suffer 
the wrath of those in high positions.
  The so-called claims of paralysis that may or may not be taking place 
in Government--will be self-induced. You cannot say we cannot go 
forward, because people are asking questions when they have a 
legitimate reason, and want answers to these questions. I say to those 
who say, ``Why are you asking these questions?'' Because it is our 
responsibility to do so. Ours is not to paralyze. Ours is not to bring 
someone down, but it is to get the facts.
  I want to tell you something. An abuse of power in this country is 
serious. And if there are those in high political positions, whether 
they be in the Treasury or the White House or any other place, or 
attempting to stifle the truth and abusing power in that manner, is 
serious. The American people have a right to know. That does not fall 
under the prerogatives of the special counsel. We cannot delegate those 
away. They are our prerogatives.
  No amount of name calling is going to stop this Senator from going 
forth and asking for the facts. That is what we are asking for; a 
hearing to get the facts.
  I would hope that our Senate leaders could agree on the format to do 
this in a constructive way so that the business of the people can go 
forward. This Senator has not attempted to obstruct it. I have made 
brief appearances on this floor. If you were to count all of the time 
that I have taken and all of my appearances, it does not amount to very 
much over the months.
  If I had not made these requests for the statutorily required RTC 
Oversight Board hearing, and had the chairman of the Banking Committee, 
Senator Riegle, not agreed as he did, we may have never learned of the 
initial meeting and the subsequent meetings that took place that were, 
at the very least, inappropriate.
  Now, when we hear some of the same Treasury people who went to those 
meetings about the RTC, to give a so-called heads up to the 
administration, to the White House, may be among the same people who 
denied and stopped the OTS from going forward and looking into this 
matter, I would say to you that there is no other course than to have 
congressional hearings. We should hold hearings in an orderly way and 
in a proper manner; and, that by denying these hearings it leads people 
to believe that there is something far greater and more significant. 
Maybe it leads people to say, ``What are you hiding, and why are you 
hiding?''
  That is the inescapable conclusion that, I believe more and more 
American people will come to. It is one that I have begun to come to. 
It is not one that I initially started out with. I simply wanted some 
facts and information, but I could not get those facts and information.
  Finally, we got it in the most terse forms, and only, again, because 
Senator Riegle and his staff called up and said, ``My gosh, why don't 
you give it to us?'' Eight Senators sent a letter asking to find out 
when the statute of limitations runs. ``Are you going to basically use 
the same procedures that have been used in other cases to protect 
whatever the Government's claim may or may not be?''
  We were stonewalled--stonewalled.
  Then of course came the days when I came down to the floor and 
presented the calendar, and talked about the statute running out. We 
got at least an extension of that statute of limitations through the 
efforts of Senator Metzenbaum, myself and the rest of my colleagues.
  These are the questions that people have a right to have answered. We 
should not be met by this barrage, attack, claims that ``you are trying 
to hurt the administration, trying to take them down, trying to damage 
some program, whether it is their health program or another one.'' That 
is not the case. That is absolutely not the case. But that is the cry, 
and that cry is a false canard.
  Let me suggest that you go back to the Watergate days and look at the 
testimony of John Dean. John Dean said that the administration, while 
they talked about cooperation, said they would attack those in the 
Congress as it relates to their conduct of the hearings, saying that 
these are politically inspired. There is beginning to be a parallel 
here: Shredding of documents, missing documents, the manner in which 
papers are taken out of Mr. Foster's office after his death, in the 
manner in which the Park Police and FBI were not permitted to do their 
jobs, the concealment in such a manner of these basic facts, raises 
questions. It seems to me that the very people who cry that we are 
attempting to obstruct them from pursuing their program, are as a 
result of either their own actions or the actions of those close to 
them, creating the situations that lead people to say, ``Why are you 
doing this?'' All we want are the facts.
  I want to know why, if what this article alleges is accurate, it was 
that Mr. McCormally was refused permission, and who it was that made 
that decision. Did they consult with Treasury? Which officials in 
Treasury? Was it Mr. Altman? Did Mr. Altman advise others as it relates 
to this? Did he speak to the White House? Did the counsel, Joan Hanson, 
who, three times before, went to the White House? And when counsel to 
the Treasury Department undertakes that kind of mission, there is no 
excuse. That is a person steeped in the law. Was she consulted on this? 
Did she go to the White House and speak to others about this? These are 
questions that flow from just a cursory review of this article.
  Mr. President, I ask unanimous consent that the full article be 
printed in the Record in its entirety.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                [From the New York Times, Mar. 16, 1994]

  Treasury Official Urged 2d Inquiry--Regulator's Request for Look at 
                Failed S&L Is Said To Have Been Rejected

                          (By Stephen Labaton)

       Washington, March 15.--Clinton Administration officials 
     last year rejected a recommendation by a senior regulator to 
     open a Treasury Department investigation into the failed 
     savings and loan association owned by President Clinton's 
     former partner in the Whitewater venture, Government and 
     Congressional officials said today.
       The requests to open a broad investigation of the savings 
     institution was made by Brian McCormally, the top enforcement 
     official for the Midwestern division of the Office of Thrift 
     Supervision, which is part of the Treasury Department.
       At the time another Federal agency, the Resolution Trust 
     Corporation, had already been investigating the institution, 
     the Madison Guaranty Savings and Loan Association.
       The two agencies have overlapping jurisdictions and often 
     conduct separate investigations into failed savings 
     associations. But the thrift supervision office has a larger 
     staff and greater enforcement powers, and has handled many of 
     the most significant investigations of savings associations 
     and their lawyers and accounts.


                          new questions likely

       The decision to reject the request for an investigation by 
     the thrift supervision office is likely to raise new 
     questions in Congressional hearings scheduled for next week 
     about whether officials in Washington tried to narrow 
     potentially embarrassing inquiries into Madison. Before if 
     failed, Madison had been owned by James B. McDougal, the 
     Clintons' business partner in the Whitewater Development 
     Company, a 200-acre real estate venture along the White River 
     in northern Arkansas.
       Government officials and Congressional aides said the 
     request was turned down last fall by Mr. McCormally's 
     supervisors in Washington, Carolyn Lieberman, acting counsel 
     to the thrift supervision office, and Jonathan Fiechter, 
     acting director of the office. They report to senior 
     political appointees at the Treasury Department, and rarely 
     make major decisions without high-level consultations.
       William E. Fulwider, the spokesman for the Office of Thrift 
     Supervision, declined to discuss the case or to say whether 
     its officials had consulted the Treasury Department.
       Michelle Smith, a spokeswoman for the department, said: 
     ``There was no involvement by Treasury. Treasury would only 
     be involved on policy matters, not specific cases.''


                          white house contacts

       In the last three weeks the White House has found itself 
     engulfed in controversy as it struggled to defend meetings 
     between Treasury and White House officials seeking to discuss 
     the Resolution Trust Corporation's investigation into 
     Madison.
       Those contacts are now being examined by an independent 
     counsel, Robert B. Fiske Jr., who is trying to determine 
     whether the trust corporation's investigation was improperly 
     impeded by Administration officials. Ultimately, the trust 
     corporation decided last fall to refer questions about 
     Madison to the Justice Department to investigate for possible 
     criminal violations.
       Mr. Fiske has also been examining whether Madison 
     improperly funneled money into Whitewater or into Mr. 
     Clinton's re-election campaign in 1984, when he was Governor 
     of Arkansas.
       As enforcement director for the Midwestern region of the 
     Office of Thrift Supervision, Mr. McCormally oversees 
     enforcement efforts against savings associations in 23 
     states, including Arkansas. He is best known as the Federal 
     regulator who supervised the inquiry into Neil Bush, a son of 
     former President George Bush, who settled charges of conflict 
     of interest over his role in the Silverado Banking, Savings 
     and Loan Association in Denver.
       Reached in Chicago today, Mr. McCormally said he could not 
     comment about the Madison matter.


                        questions raised in 1992

       Officials said that Republican appointees in the Treasury 
     Department initially instructed Mr. McCormally to look into 
     the Madison case after news reports about the savings 
     institution appeared in the 1992 Presidential campaign. But 
     the officials said it was not until last year, after the 
     Clinton Administration had taken office, that Mr. McCormally 
     believed he had enough information to warrant a request to 
     open a formal investigation.
       Officials said Mr. McCormally asked his superiors in 
     Washington last fall for permission to look into the collapse 
     of Madison. It is unclear whether he made the request before 
     or after the meetings between Treasury and White House 
     officials concerning the Resolution Trust Corporation's 
     inquiry.
       The Office of Thrift Supervision regulates the savings 
     industry, and the trust corporation handles savings 
     institutions that have been seized and bailed out by the 
     Government. The thrift supervision office, created in 1989, 
     also has many records from its predecessor agency, the 
     Federal Home Loan Bank Board, and officials said it had many 
     of Madison's files from the 1980's.
       The House Banking Committee is scheduled to hold a hearing 
     next week that is supposed to be a semiannual review of the 
     trust corporation, but Republicans are hoping it will wind up 
     as a showcase for problems in the Madison case.
       Republicans on the committee have asked regulators at the 
     trust corporation and the thrift supervision office for files 
     about their handling of the Madison case. But the chairman of 
     the committee, Representative Henry B. Gonzalez, recently 
     wrote to the heads of the two agencies ordering them not to 
     comply with the Republican request.

  Mr. D'AMATO. I will not say any more with respect to this today, 
because we have this important bill on the floor. I want to go forward 
with the bill. I commend the staff on both sides, the majority staff, 
as well as the chairman of the Banking Committee, for bringing us so 
far as it relates to this particular legislation, which I hope we can 
even pass today. I do not know of any big controversial matters or 
reasons we should not act on this bill.
  If Members have amendments, please come down and submit them to us so 
that we can act on them accordingly and do the business of the people.
  Mr. RIEGLE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. RIEGLE. Let me make a comment or two. First of all, I appreciate 
the strength of the feeling of the Senator from New York on all of the 
issues he has addressed here today. I want to say that I appreciate the 
fact that notwithstanding his concern about the issue he has just 
talked about and made reference to with respect to the article in the 
New York Times today, he feels that we should move ahead with this 
legislation.
  We have worked this out on a bipartisan basis, and it has a number of 
elements which I have described--all important, all timely. I 
appreciate the fact that he is prepared to move that forward, and also 
the parts of it that represent the thinking he has contributed in terms 
of small business loan securitization, among other things.
  With respect to the other issues the Senator raises, in rereading the 
story in today's New York Times, I fully would imagine that Robert 
Fiske, whom I have met with and whom the Senator has met with, will 
pursue any questions that arise which fall within the scope of his 
efforts.
  I do not purport to speak for him, but his charter certainly is drawn 
in such a way.
  Mr. D'AMATO. Mr. President, if my colleague will yield for an 
observation--and I do not want to debate my colleague on this--but 
there is a very fine distinction between the role of Congress as it 
relates to the abuse of power, which may not constitute a criminal act 
per se, but is absolutely unreasonable, unwarranted, and should not be 
done.
  The people have a right to know that. While Mr. Fiske will be looking 
to see if there was criminal wrongdoing or perhaps questionable actions 
relating to fraud on the civil side, et cetera, it is Congress' 
responsibility to see to it that we do not have the kind of 
interference and meddling which really gets into the abuse of power. 
There is that fine line.
  That, I think, is our prerogative. That is not something that can 
wait indefinitely; a reasonable period of time, if he wants to speak to 
Mr. McCormally, fine. If he wants to subpoena him, fine. But we have a 
right to know, and the public has a right to know sooner, rather than 
much later. That is the only point I make.
  Mr. RIEGLE. Mr. President, let me address that, as well. As you know, 
we had the hearing, now a couple of weeks ago, when the Treasury 
officials were in. What I have done since that time is kept the 
committee record open. I have kept it open precisely so that any other 
questions that should be asked and answered, which fall within the 
scope of our oversight, can be done. I have prepared a series of 
questions myself to be sent to the Treasury Department, to fill out the 
facts and the information I think we need to have as it relates to 
questions that arose.
  Because that committee record is open as of this moment, I think that 
any people to whom the questions would be addressed are under an 
obligation to respond accurately and fully, and I expect that they will 
do so.
  I think any question that you wish to raise on these points can 
properly be submitted to them, and I will keep the record open in order 
to get those responses. I think that falls within the scope of the way 
our procedure works and how we get answers to questions that arise. So, 
in any event, I think that also is an avenue that is available at this 
moment that I suggest to the Senator.

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